Outsourcing deal signings in the pharmaceutical vertical grew at a faster pace than in other verticals in 2010, surging to a ten-year high that represented 81 percent growth over 2009 as compared to the overall industry average of 13 percent, according to Everest Group’s research report, Outsourcing and Offshoring Trends in Pharmaceuticals. It estimates outsourcing levels in the pharmaceutical vertical, currently about three to five percent of the pharmaceutical industry’s total annual spend of $490-670 billion, has the potential to reach ten to 15 percent levels that translates to an untapped opportunity of $33-65 billion.

“The pharma industry is a nascent adopter of outsourcing as compared to some other industries, but multiple factors have emerged that are driving adoption, and we saw strong evidence of these dynamics coming into play last year when the market peaked,” says Amneet Singh, VP,  global sourcing. “The spike we saw in 2010 was largely the result of pent-up demand from the recessionary economy; however, the business drivers for outsourcing adoption remain and continue to evolve. Cost pressures, a changing pharma ecosystem, emerging markets and other market forces are continuing to drive the market. Moving forward, we expect to see an increase in sourcing of drug development and research, supply chain, data management, and analytics functions.”

Historically, U.S-based pharmaceutical companies drove demand for outsourced services; however, European companies, excluding those based in the UK, have dominated contract signings over the past three years. wt